Bargain Basement or Armageddon

Just what is going on in the property market in Spain? Is it bargain basement with fun for all, or the end of fun, sun, and you know it, as the day of reckoning clouds the sky?

It is a little like the glass half full or half empty theory, as those who look for bargain properties cautiously dip their toes into the sea of properties flooding the market. Yes, there are bargains to be had as vendors reduce prices and some of them are well worth the asking price, which has often been reduced several times. With the euribor now around 1.6% the average family will also save 310 € a month on their mortgage.

Many of our client ask us about repossessed properties. But with the banks holding such properties until their employees and their families and favorite clients have had first choice, believe me, there is little that is a`bargain´, only dilapidated flats in run down areas. As always, it is location, location, location. This is the key to whether it is a good bargain.

We shall have to see if the day of reckoning has arrived in Spain or not. The boom that had been going on for so long has taken its toll, with an excess of unwanted properties around. According to the ministry of housing the building of new homes for the year April 2008-March 09 was down by 46.5% while the total of properties started before and terminated during this period was down by 15.7%. It is also worth considering that of these figures many of the properties are designated VP which is for public good (similar to council housing) which has seen a rise of 33.4%. So, has the lesson been learnt and will the building stop? We can only hope this is the case as the figures seem to suggest.

Many must also have seen programmes like Paradise lost on ITV UK with the horror stories about Spain. Once again; make sure the property is legal before purchase. Also don´t buy off- plan from a pretty brochure - this must be a no brainer in today´s climate.

So, bargain basement or Armageddon? In the end it is what you make it.

A Lucky Man and The Cavalry

There is no getting away from it - there is a marked downturn in the property market in Spain. This is also in our neck of the woods - Valencia - which up till recently had seen a spectacular rise in property prices. As an estate agent it hurts me to say it, but sometimes the old adage of `what goes up must come down´ can even happen in our business!

According to the Spanish press the price of property has fallen by 8% in the Valencian community from January to September this year. While this is a general figure which covers the whole area, it is eyebrow raising. The actual city of Valencia is classed as having a drop of 6.5%. As to why there is a fall, the newspaper states that the reason is a lack of buyers! Up to now Spanish banks have exercised a great deal of caution - no sub prime mortgages here! But now they are tightening up even more if that is possible.

So what of my title - A lucky man and the cavalry? Well, a couple of weeks ago in the town of Algemesi the council held an auction of 30 new council flats. Instead of being inundated with buyers as is usual, you can imagine the auctioneer´s (not to mention the councilers) surprise when one lonely man walked in to bid! It seems that nobody else in the town had managed to get a mortgage.

We all know that there is a surplus of new properties (mostly flats), which adds up to around a million in the whole of Spain with 140.000 of them in the Valencian community. There is also a lack of council housing in Spain. So, here comes the cavalry in the guise of Beatriz Corredor the housing minister(ress?) who promised yesterday to absorb this surplus by turning alot of it into council property to rent and sell with guaranteed mortgages. By doing this the minister hopes to stop the price fall before the two year period which other experts believe it will take to provide a natural equilibrium in the sales and purchase market.

Whatever happens nobody can deny that with so many bargains around perhaps now is the time to buy!

WHEN TIMES ARE TOUGH.......

There has been so much in the news recently about how hard it is to sell a property in today´s economic climate and scare stories abound. But vendors are still selling. Of course, not as much as in the heydays and not always at the price they hoped for. The two basics remain - location and quality sells.

Buyers are more choosy and why shouldn´t they be? Buying a home is a life-changing decision. Banks are also more choosy about who they lend their money to, and while this ends up as a disappointment for many when their mortgage application is turned down it can sometimes be a help in the long run. The Spanish and their banks have always held urban land in high regard as they know that it has a very tangible value and as such will be easy to re-sell. They therefore classify it as low risk. The problem is that we English are romantics at heart and we long for our olive and orange groves with our dream `finca´(farmhouse) and pool in a pleasant rustic setting. And this is where the big change has come, as banks have now become rather difficult when it comes to giving out mortgages for this type of property. They also require deeds which are squeaky clean, which may be an unwelcome irritation for the buyer who just wants to move straight in to his/her dream home. But it will make them think that when they come to sell up, the next purchaser could have to go through the same procedure unless the banks ease up or the buyer pays cash.

Times are also hard for estate agents and many have gone under. But for those of us who are still around we see that more vendors are placing their properties with us instead of selling privately, as they know that not only do we reach a wider market but they can also keep their pride intact. As we know, pride is one of many Spanish (and perhaps English!) traits - they hate to reduce their price and will not do so until a buyer is found. So, that is where your estate agent´s negotiating skills come in!

something positive in the Valencia property market?

With all the negative shots aimed at Spain over the year or so it is good to hear something positive at last. Madrid´s `El Mundo´published the following interesting statistics on 18th Feb:

Foreigners (yes, we English are also foreigners!) spent 5.241 million Euros on purchasing property in Spain last November compared to 4.214 million Euros in November 2006. This means an increase of just over 24%.

Total property sales in November were 520 million Euros whereas in November 2006 it was 374 million, giving an increase of 39%.

Rents are also still growing with 3.5% increase in Valencia in January.

While estate agents smiles have faded as much as their tans this winter as the market wound down and even stopped for some, there is at least a ray of sunshine beaming through. As these figures show that there is still confidence in the property market in Spain.

Put on your sunhats, slap on the sun cream and enjoy! Happy 2008 to you all!

The sun is up and property prices are down in Valencia

Despite some storms in October Valencia hit the news this month as high temperatures saw many flocking to the beaches last weekend - and the good weather goes on. Property prices on the other hand are rather stable in the city centre with a few bargains to be had in areas around the city.

With less hard earned cash around investors could do worse than fixing their sights on Valencia, as the city once again puts on her gladrags for the new Formula 1 race which will start next year set against the fantastic backdrop of Calatrava´s futuristic landmark buildings and the new port. The hotels are already fully booked for the event. This will be followed by the next America´s cup.

If you are not wealthy enough to be taking part you can at least watch. After all who would like to be dressed in a tight suit and helmet sitting in a car or running around pulling ropes on a yacht. Watching the events and their glamorous entourage in the warmth of the sun soaking up the atmosphere with a drink in your hand can be rather pleasant, if not as fulfilling!

Property news Valencia

Weather to buy or whether not to buy? This seems to be the burning question at present in Spain. The scare stories that hit the uk this summer of a crisis in the Spanish property market seem to have been washed away with the continued bad weather in Northern Europe which has now driven buyers back to the ever sunny Spain. Even the small rise in the infamous euribor does not seem to phase the sun loving Brits as we see a surge of enquiries. The surprising thing that does put them off buying in Spain is other Brits, so a recent poll found! For those looking for something Spanish with a touch of glamour then the re-vamped city of Valencia has it all - the next America´s Cup yacht race is now secure, as is the Formula 1. There is great countryside unspoiled by tourism just less than half an hour´s drive away. But don´t expect the prices to have tumbled. While still much cheaper than her big sisters - Madrid and Barcelona - Valencia knows its days as the shabby third largest city are well and truly over, she is polished and gleams bright with the best of them

DEAL OR NO DEAL

With so many having their say about what is going on in the Spanish property market we would like to join in. Perhaps our view may also be worth something more than those sitting in press offices or television studios in London or elsewhere. For a start we live here, and have done for nearly 40 years and we have a practical knowledge of the property market. We also have seen many fluctuations in the Spanish and UK markets which is a natural phenomenon (as nowhere remains static except perhaps Germany! And even there things are on the move, albeit slowly). What has been extraordinary have been the continuing high price surges of the last few years in Spain. Many properties ended up with a high price tag in relation to their location and quality of build.

So, now at last things are slowing down, or as some would have it – even come to a full stop, or heaven forbid, dare we say it, even dropping!!! We all know about the so called `overbuilding´ in Spain which could be a factor, as well as, the rise in mortgage rates, add to that the `drop´ in foreign buyers as they rush to buy in Estonia, Goa, etc. and there you have it.

Does this mean that those who have invested or who wish to invest here are doomed? Far from it! Since when has property investment abroad been such a short term policy? Yes, it is a shame that the people we saw on the TV the other night (Trevor McDonald Tonight) were upset that they were not going to get back 25%-50% profit on their properties that they had bought last year or the year before on the Costa del Sol that they would have done a couple of years ago. But as always it depends on where and what you buy.

With regard to `overbuilding´ we have all seen the cranes and new builds going up all over the place and we all wonder if they are needed, but bear the following in mind. That in certain parts of Spain there is actually a shortage of housing – Valencia city is one of these places. So, what about mortgage rates? I can remember quite a few years ago (showing my age!) when rates were 16% and people still bought, including foreigners! And as to people moving away from Spain, well that will always be. People come and go, but Spain will always remain the most accessible county for northern Europeans looking for the sun.

I heard today on the Spanish news that a luxury property in Madrid has just been sold for the record price of 17.000 € per square metre! But back to Valencia; on the 25th May, Coperfil a leader in logistics development announced that Valencia needed a 64% increase in commercial development within the next 4 years to keep up with the current needs. The company sees the new port of Valencia as the commercial gateway of the Levante coast. They went on to forecast that the current population of 2 million will reach 7 and a half million in 2015. With the newly spruced up city, and the glamour of the formula 1 set now confirmed, not to mention the soon to come fast train from Madrid, I would say that the future is rather bright for Valencia.

For those of us who are already here our advice is sit it out. If your property is in a good location and reasonably priced, and you can´t hang on to sell, then aim it more at the Spanish market as we have noticed they are still buying. And for anyone thinking of buying then now is the time; our tip would be, if you see a property you like, then go in with an offer and chances are you could be lucky and get the bargain of a lifetime!